Econit says govt loath to give more to provinces

Econit says govt loath to give more to provinces

JAKARTA (JP): The bill on striking a financial balance between
the central government and provincial administrations will not
affect the government's management of revenue generated from
natural resources, according to consultancy firm Econit.

Econit director Arif Arryman said on Wednesday the
government's lack of commitment to sharing the resources was
reflected in the fact that the bill, currently being debated by
legislators, did not have a clear-cut revenue sharing formula.

The bill also indicated that the government is unwilling to
empower economic activities in the provinces, he said

The bill states the revenue-sharing formula will be detailed
in the regulation to be drafted by the government after the
enactment of the law.

Arryman said he was afraid the government might compose a
formula in conflict with the public's demand for a greater share
in the revenue and called for revision of the bill.

"The law on striking a fiscal balance should specify the
revenue-sharing formula to ensure the government will fairly
share the revenue with the local administrations."

Arryman said revenue sharing is currently a sensitive issue
which could lead to the country's disintegration if not properly
addressed.

Protests have escalated in several natural resource-rich
provinces including Aceh, Riau and Irian Jaya over the perceived
unfair distribution of revenue by the central government. Calls
for independent provinces have been fueled by the debate.

The oil and gas bill, also being debated by the House of
Representatives, likewise does not provide a clear-cut revenue
sharing formula.

Arryman said the bill on striking a fiscal balance between the
central government and local administration, as the overarching
law on natural resources, must provide a revenue-sharing formula
for a variety of natural resources, including oil, gas and mining
assets.

"The oil and gas bill must refer to the bill ... in terms of a
revenue-sharing formula."

Econit researcher Tri Handoyo said the fiscal balance bill was
cursory and warned that the government could compose regulations
in conflict with the decentralization spirit.

"The bill was drafted by New Order officials who could not rid
themselves of their centralistic perspective," he said.

On Wednesday, an economist from Gadjah Mada University in
Yogyakarta, Revrisond Baswir, said people in the provinces were
concerned about the central government's grip on the country's
economy.

"Allegations that 30 percent of the state budget has been
abused have strengthened people's doubt over Jakarta's ability to
manage the country's money," Revrisond said at a seminar on the
economy organized by the Institute of Economic and Development
Analysis in Yogyakarta.

According to Revrisond, at least 95 percent of state revenues
were controlled by the central government, leaving about five
percent in the hands of provincial administrations. (jsk/23)